With Layoffs Looming, Is the "Google Magic" Gone?

Google CEO Eric Schmidt, who spent much of last fall declaring the search engine unaffected by Wall Street's crisis, has admitted that the company is "not immune." But is he being honest about its plight?

At a technology conference last week, Schmidt was bullish about the company's prospects, promising that the company could apply the "Google magic" to the banner-ad business, just like it did with search advertising.

At Silicon Alley Insider, Henry Blodget hears differently. His sources tell him that search revenues are down "markedly" over the past month.

That squares with a rumor we heard from inside the Googleplex: That security is prepping for a round of "white badge" layoffs.

What are "white badges?" The supposedly unhierarchical Google has a system of badges: red badges for contractors, white badges for regular employees. Like the red-shirted crew who served as cannon fodder on Star Trek, red-badged contractors have taken the first hit, with Google laying off thousands since September. Save for a hundred recruiters laid off in January, the white badges have been left mostly unscathed.

I hear there will be more layoffs of "white badges" (a security guard told me). The next round will be big. It should be announced around the 9th — right in time for the close of the first quarter.

The 9th is today, and we haven't heard anything yet about layoffs, so our tipster may be wrong on the timing; the quarter has three weeks left in it, after all. But if Blodget is right about Google's revenues, our tipster may be correct. A Google spokesman did not respond to a request for comment.

On Charlie Rose last week, Schmidt, asked if Google would buy Twitter, said that he was unlikely to buy anything, "partly because I think prices are still high." Ah, "partly." Could Google's cratering business fill in the rest of his unspoken reluctance? The clip: